RECORDRE REPORT

ISLAMABAD: Ministry of Finance is against of making Public Procurement Regulatory Authority (PPRA) a powerful institution and stated that its role should not be beyond that of an advisory body.

The Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla, met here on Thursday to know how the functioning of PPRA was impacted subsequent to the government's decision of placing it under the control of Ministry of Finance.

An official of Finance Division stated that PPRA's role should not be beyond that of an advisory as PPRA rules are enforced through Auditor General of Pakistan. However members of the committee stated that as the auditor general does not conduct audit of current fiscal year, it may not be effective to take action against corrupt practice timely.

The committee expressed serious concerns over the absence of enforcement law in the PPRA Act, which is critical to ensuring transparency in the procurement. The chairman of the committee remarked that the PPRA has become a parking place of bureaucracy.

Managing Director PPRA Khizar Hayat Khan stated that there is no inbuilt mechanism in the PPRA Act to check the violation of rules in public procurements.

He added that the PPRA can monitor only up till tendering process and can not go beyond because of absence of enforcement powers. "I have requested a board meeting to put a proposal of financial and administrative autonomy to the PPRA at the earliest," he added.

He said that three private members' positions in PPRA have been vacant since 2012 and added the employees' service rules and regulations by authority's board are not acceptable to the government primarily because it was providing finances for payment of salaries.

The committee asked the MD PPRA to prepare and submit a comprehensive proposal to the committee after hiring a consultant and following international best practices for onward recommendation to the government.

The chairperson Competition Commission of Pakistan (CCP) told the committee stated that commission received a letter from a citizen regarding a CAA tender published for establishment of flight kitchen on a joint venture basis at the new Islamabad airport (NIIAP).

She added that concern was expressed over the fact that CAA would run the flight kitchen on a joint venture (JV) basis and that having a single flight kitchen was contrary to the current practice whereby there were more than one flight kitchen at major airports.

To assess the possible impact of CAA's proposed action, an open hearing was held under Section 29(c) of the Competition Act, 2010 seeking views of each of the stakeholder involved. The hearing was attended by representatives from PIA, Airblue, Shaheen, Emirates and CAA as well as flight caterers.

Subsequent to the hearing, the commission issued an opinion in the matter which serves as a guideline for the CAA and any party that is successful in obtaining the tender to run a single flight kitchen.

The airlines raised the contention that CAA's involvement in the business through a JV would create a conflict of interest as its primary role is to regulate air traffic and airport activities and that this measure was tantamount to creation of a monopoly by the regulator.

The CAA in its submissions noted that the intention behind establishment of a single facility was to provide a world class flight kitchen that is commensurate with the other facilities to be offered at the new airport which would encourage international airlines to uplift meals. That CAA was already involved in the flight catering business as it had leased out lands at airports for the purpose and that in the instant matter CAA's prime motivation was regulatory and price considerations (pricing of meals) rather than monetary gains.

The CCP in its opinion states that there is no objection to the creation of a single flight kitchen at the NIIAP as long as the following competition concerns are properly addressed. She said as per latest development, the CAA has scrapped the previous tenure and issued a new one with no joint venture and for establishment of two kitchens at the NIIAP.

She also stated that as for the recovery of 3% fees and charges of regulatory authorities, the SECP has paid Rs46.101 million to CCP while the case with other regulatory authorities is under consideration.

The finance committee was also briefed by the National Bank of Pakistan and Habib Bank Limited on alleged fraud of Rs1.5 billion.